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Qualified Experienced Volunteer Scenarios and Test QuestionsDirectionsThe first four scenarios do not require you to prepare a tax return. Read the interviewnotes for each scenario carefully and use your training and resource materials toanswer the questions after the scenarios.Scenario 1: Donna and Becky ButlerInterview Notes Becky turned 18 years old in November 2020. She is a senior in high school. Shehas a son who was born in May of 2020. She lived with Donna, her mother, all yearand the baby lived with them from birth. Becky works part-time and made about 6,500 in 2020. She was saving the moneyfor college, but she ended up spending it on the baby. Becky does not provide morethan half of her own support. The baby’s father, Thomas, pays 250 per month in child support. Becky uses themoney to pay for some of the baby’s expenses. Thomas and Becky were nevermarried and do not live together. Donna received a Form 1099-R showing 20,000 with code 3 in Box 7. She wasborn in 1971. Donna also receives a widow’s pension from Social Security in theamount of 15,000. Donna’s husband died in 2015 and she has not remarried. Shepaid all the remaining support and all the costs of keeping up the home for Beckyand the baby. In 2020, Donna received an Economic Impact Payment (EIP) of 1,200. Becky didnot receive an EIP. Becky, Donna, Thomas, and the baby are all U.S. citizens with valid Social Securitynumbers.Scenario 1: Test Questions1. Which of the following statements is true?a. Thomas can file as Single and claim the baby as a dependent.b. Becky can file as Single and claim the baby as a dependent.c.Donna can file as Qualifying Widow and claim the baby as a dependent.d. Donna can file as Head of Household and claim Becky and the baby asdependents.Qualified Experienced Volunteer119

2. The person eligible to claim the baby as a dependent can also claim which of thefollowing credits:a. Earned income credit and additional child tax creditb. Earned Income credit, additional child tax credit, and credit for the elderly anddisabledc.Additional child tax credit.d. The baby is not a qualifying child for any of the credits3. The person eligible to claim the baby as a dependent can also claim a 500 recovery rebate credit on their 2020 tax return.Note: Congress may have enacted additional legislation that will affect taxpayersafter this publication went to print. Please answer questions based on the information provided in Publication 4491, VITA/TCE Training Guide and Publication 4012,VITA/TCE Resource Guide.a. Trueb. False120Qualified Experienced Volunteer

Scenario 2: Clare Ellsworth and Her ParentsInterview Notes Clare is 21 years old and a full-time college junior majoring in nursing. She residesin the campus dorm when school is in session, but lives with her parents duringthe summer. Clare spent 1,000 on books. Clare works at the Campus Pharmacy on weekends, but it doesn’t cover all of herexpenses. Clare received a Form W-2 from the Campus Pharmacy as shown on thefollowing page. Clare’s parents are providing the majority of her support. Clare has not been convicted of any felony. She also received Form 1098-T as shown on the following page. The Box 5 amountwas an unrestricted scholarship. Clare and her parents came to the site to have their returns prepared. They want tomaximize the tax benefits for the family.Qualified Experienced Volunteer121

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Scenario 2: Test Questions4. Clare’s parents would like to claim the American opportunity credit on their taxreturn. What treatment would provide Clare and her parents the most favorableoutcome?a. Neither Clare nor her parents can claim the credit because the scholarshipincome was more than education expenses.b. Clare includes 5,000 as taxable scholarship income and her parents claim 3,000 in qualified education expenses.c.Clare includes 3,000 in taxable scholarship income and her parents claim 3,000 in qualified education expenses.d. Clare does not need to report any scholarship income because it was foreducational purposes and her parents claim 4,000 in qualified educationexpenses.5. Which of the following statements is true?a. Clare is not required to file a tax return because her gross income is below thefiling threshold.b. Clare is required to file because her total income is over 4,300 and herparents cannot claim her.c.Clare is required to file because her parents can claim her as a dependent andher income is over 4,300.d. Clare’s unearned income is over 2,200; therefore, the Kiddie Tax applies andher return is out of scope.Qualified Experienced Volunteer123

Scenario 3: Genevieve ChabotInterview Notes Under a joint and survivor annuity, Genevieve is receiving widow’s benefits from herdeceased husband’s pension. Genevieve’s date of birth is 5/31/1965. Joe, Genevieve’s husband, retired at age 60 on January 1, 2010 and began receiving his pension benefits immediately. He died in 2015. Genevieve received a Form 1099-R, as shown below. Genevieve didn’t bring last year’s tax return and claims the full amount of the retirement distribution was taxed in previous years. Genevieve is a U.S. citizen with a valid Social Security number.124Qualified Experienced Volunteer

Scenario 3: Test Questions6. What age is used to compute the taxable amount of the pension using theSimplified Method?7. Using the Simplified Method, you determine the taxable amount of the distributionis 13,054. How much should be entered as the amount previously recovered inthe simplified method worksheet?a. 0b. 146c. 1,460d. 5,000Qualified Experienced Volunteer125

Scenario 4: Barbara DrakeDirectionsThis scenario does not require you to prepare a tax return. Refer to the interview notesand accompanying Forms 1099-NEC and 1099-K for the information needed to answerthe questions that follow.Interview Notes Barbara is a self-employed rideshare driver for Widget Ride Share. Barbara provided a statement from the ride share company that indicated the amountof mileage driven and fees paid for the year. These fees are considered ordinary andnecessary for the ride share business:– 5,775 miles driven while transporting customers– Ride share fee: 1,200– Safe driver fee: 50– Airport fee: 115– GPS device fee: 120 Her recordkeeping application shows she also drove 3,225 miles between rides and2,134 miles driven between her home and her first and last customer of the day.Barbara has a separate car for personal use. She bought and started using her secondcar for business on September 1, 2020. She kept receipts showing she spent 129 ontolls and 960 on gasoline. Barbara also provided the Form 1099-NEC and Form 1099-K that she received fromWidget. See the next page.126Qualified Experienced Volunteer

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Scenario 4: Test Questions8. What is the total of Barbara’s self-employment expenses on Schedule C?a. 4,935b. 6,789c. 7,749d. 8,0169. Which of the following statements regarding self-employment tax is false?a. Self-employment tax is Social Security and Medicare taxes collected primarilyfrom individuals who work for themselves, similar to the Social Security andMedicare taxes withheld from the pay of most wage earners.b. The Social Security Administration uses the information from Schedule SE tofigure a person’s benefits under the Social Security program.c.Taxpayers who are already getting Social Security or Medicare benefits are notrequired to pay self-employment taxes.d. Taxpayers who do not report all of their self-employment income could causetheir Social Security benefits to be lower when they retire.128Qualified Experienced Volunteer

Scenario 5: Kenneth and Martha KemperDirectionsUsing the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario. Toensure the accuracy of the taxpayer’s return the volunteer should review and completethe applicable sections of the Form 13614-C.Note: When entering Social Security numbers (SSNs) or Employer IdentificationNumbers (EINs), replace the Xs as directed, or with any four digits of your choice.Interview Notes Kenneth and Martha are married and would like to file a joint return. Kenneth applied for Social Security Disability benefits in July 2018, and he beganreceiving benefits in December 2020. The payment included a lump sum distribution for the time Kenneth’s application was pending in 2018 and 2019. Kenneth andMartha filed a joint return each year. In 2018, their modified adjusted gross incomewas 33,600, and in 2019 their modified adjusted gross income was 35,229.Martha has never received Social Security benefits. Kenneth and Martha have never itemized their deductions. Kenneth and Martha received a state income tax refund of 230. Martha was enrolled in her employer’s high deductible health plan (HDHP) with selfonly coverage for all of 2020. Martha’s employer did not offer family coverage. Martha contributed 520 to her Health Savings Account in 2020. Her contributionswere made pre-tax through her employer’s cafeteria plan. Martha’s only medical expenses for the year were two doctor visits totaling 80. Kenneth purchased health care coverage through the Marketplace, which he had allyear. The Kempers received an Economic Impact Payment (EIP) of 2,400 in 2020. If the Kempers are due a refund, they want it direct deposited to their checkingaccount. Bank Routing is 111000022; Checking Account number is 1234567890. Ifthey have a balance due, they will mail in the payment.Qualified Experienced Volunteer129

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ABC INVESTMENTS2020 TAX REPORTING STATEMENT456 Pima PlazaYour City, YS ZIPKenneth Kemper8705 Skidmore WayYour City, YS ZIPAccount No. 111-222Recipient ID No. 457-00-XXXXPayer’s Fed ID Number: 25-8XXXXXXFORM 1099-B* 2020 Proceeds from Broker and Barter Exchange TransactionsCopy B for Recipient OMB NO. 1545-0715Short-term transactions for which basis is reported to the IRSReport on Form 8949 with Box A checked(This Label is a Substitute for Boxes 1c & 6)8 Description, 1d Stock or Other Symbol, CUSIPActivityType1a QuantitySold1b DateAcquired1c Date Soldor DisposedUSA EXAMPLE / 556435200 / ABCPX1/31/2020(IRS Form 1099-B box numbers are shown below in bold type)1d Proceeds1e Cost orOther BasisUnadjustedGain / Loss (-)1f AccruedMarketDiscount1g Wash SaleLossDisallowed174.984 FederalIncome 8Sale85.8810002/11/2020 2020 5/14/2020 12/31/20207 Loss Not AllowedBased on Amountin Box 1d0.00936.56900.1236.44Subtotal TOTALS5,104.094,502.22601.870.00174.980.00This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penaltyor other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.Page 1 of 1Qualified Experienced Volunteer135

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